Mei Xinyu: Food security has to weather storms
29 Jul, 2021  |  Source:CHINA DAILY  |  Hits:1194

True, the unprecedented rainfall wreaked havoc in Zhengzhou, capital of Henan province, but since severe rainstorms have also hit other parts of Henan, such as Gongyi and Xinxiang, and the neighboring Hebei province, the assessment of the impact of the deluge should not be confined to Henan alone.

In 2020, Henan and neighboring Shandong, Anhui and Hebei provinces were among the 13 provinces that produced more than 20 million tons of grain-their respective output being 65.25 million tons, 54.46 million tons, 40.19 million tons and 37.95 million tons, or 9.7 percent, 8.1 percent, 6.0 percent and 5.7 percent of China's total grain output.

More precisely, the grain output of Henan is equal to that of France and more than that of Ukraine. Shandong's grain output is comparable to that of Canada, while Anhui and Hebei produce more grains than Thailand. So if there is a sharp decline in the four provinces' grain output, it would be difficult, even impossible, to make up for the gap in the global grain supply.

The provinces were also the four leading producers of summer grain in China this year, with Henan alone accounting for 26.1 percent of China's summer grain output-equivalent to 5.7 percent of the total grain output in 2020. The summer grain output of the four provinces was 96.23 million tons, or 66 percent of the national summer grain output, and 14.4 percent of the total grain output in 2020.

Fortunately, Henan, Shandong, Hebei, Anhui, Hubei, Shaanxi and other major grain-producing provinces had harvested their summer crop before the deluge. But as the deluge occurred at a time when food prices are rising, the authorities need to take measures to prepare for any risks related to food security.

Yet the prospects of China overcoming the shock of the natural disaster are high, given its grain stock and operational capability. China has harvested a bumper summer crop, which will ensure grain supply throughout this year. Its total summer grain output this year was 145.82 million tons, up 2.96 million tons or 2.1 percent year-on-year, according to the National Bureau of Statistics. In particular, the wheat output of 134.34 million tons was 2.58 million tons, or 2.0 percent, more than in 2020.

China's most urgent task now is to ensure the processing, storage and transportation of the summer grain harvest do not suffer due to the heavy rainfall.

A survey on grain reserves in 2019 showed China has a grain reserve to meet the domestic demand for more than a year, a fact which has not changed. From natural disasters in the past to the COVID-19 outbreak last year, China has shown excellent emergency response, and organization and mobilization capacity. And it is expected to show the same alacrity following the record rainfall in the northern region, and minimize the damage.

Since China, compared with other major economies, has more room to maneuver its fiscal and monetary policy, and given its strict market supervision and law enforcement, it can overcome the impacts of the deluge and maintain the stability of the domestic grain market.

However, in the current international economic and political environment, China should be on guard against the possibility of extreme weather events having a domino effect on the international food markets, especially on developing countries' markets.

On the supply side, the global food market is struggling to cope with the impact of the severe droughts in the United States and Brazil, both major gain producers and exporters. More than 80 percent of the western and Midwest regions of the US have experienced moderate to severe droughts. In Brazil, the central and southern regions are facing the worst drought in a century, with the rainy season from November to March recording the lowest rainfall in more than 20 years.

And thanks to the pandemic and other factors, the international cargo market is under great pressure, with rising freight costs hindering the flow of goods such as grains and driving up food prices.

Moreover, the central banks of major Western economies, including the US Federal Reserve, have not shown any inclination of tightening their monetary policy, and liquidity still remains loose in the global financial market. Along with this, the China-US friction and the emergence of new novel coronavirus variants could deal the stock and energy markets a big blow.

Which means hot money is less likely to flow into the stock and energy markets and more likely to pour into the global agricultural market, which may not only increase food prices further but also affect food security. Therefore, developing countries should take precautionary measures to prevent speculations in the food grain market and pre-empt price hikes.

(Mei Xinyu, researcher at the Chinese Academy of International Trade and Economic Cooperation.The views don't necessarily reflect those of this platform.)